Application of Supply and

Demand
 Contents
• Application of supply and demand
• Prices of Basic Commodities
• Labor Supply, Population Growth, and Wages
• Minimum Wage Employment:
The Overall Effects
• Underemployment, Labor Force Participation
• Filipino Migrations and OFWs
• OFWs Remittances
• The Philippine Peso and Foreign Currencies
• Effects of Peso Depreciation against US Dollars
• The Philippine Housing Shortage and the Real Estate
Boom: Rent and Prices
• Affordable Housing
Prices of Basic
Commodities
 Commodities
A commodity is a basic good used in
commerce that is interchangeable with other
goods of the same type. Commodities are
most often used as inputs in the production of Click icon to add picture
other goods or services. Thus, the term
usually refers to a raw material used to
manufacture finished goods.
Commodities can be bought and sold on
specialized exchanges as financial assets.

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Prices of Basic Commodities
Commodity prices are the prices at which raw materials or basic foodstuffs are bought and sold. A
variety of factors can influence commodity prices, from weather patterns to political upheaval. Prices
for commodities are typically volatile because they are subject to supply and demand pressures from
many different factors. Global events, weather patterns, and even geopolitical tensions can impact the
price of commodities.
 Prices of Basic Commodities
Commodity prices are determined by a number of factors, including supply and demand, weather
conditions, geopolitical events, and futures market speculation.

Supply and demand are the most important drivers of commodity prices. When there is more
demand for a commodity than there is available supply, prices will increase. Similarly, when there is
more supply than there is demand, prices will decrease. Weather conditions can also have a
significant impact on commodity prices. For example, droughts can lead to higher food prices, while
extreme cold temperatures can drive up the price of natural gas.

Geopolitical events can also affect commodity prices. For example, tensions between the US and
China could lead to higher copper prices due to concerns about a potential trade war.
Futures market speculation can also influence commodity prices in the short-term. However, long-
term trends are typically more influenced by underlying fundamentals such as supply and demand.
Labor Supply,
Population Growth,
and Wages
 Labor Supply
The labor supply is the number of hours people are willing and able to
supply at a given wage rate. It is the number of workers willing and
able to work in a particular job or industry for a given wage.

Labor Supply Curve

The graphical representation of the relationship between the wage rate
and the quantity of labor supplied.

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 Figure 1 below shows a labor supply
curve:

The labor supply curve for any

industry or occupation will be
upward sloping. This is because, as
wages rise, other workers enter this
industry attracted by the incentive of
higher rewards. They may have
moved from other industries or they
may not have previously held a job,
such as housewives or the
unemployed.

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 Population Growth
Population Growth can be defined as the increase in the number of people in a
given area. Population growth can be measured in a neighborhood, country, or even
global level

There are three major factors that affect population growth. These factors are fertility
rate, life expectancy, and net immigration levels.

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 Population Growth
The Fertility Rate is the number of births that 1,000 women are expected
to go through in their lifetime.

Life Expectancy is the average lifespan that a person is expected to

reach.

The Net Immigration Rate is the total change in population from people
moving in and out of the country.

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 Population Growth
Two types of population growth:

• Exponential
• Logistic

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 Population Growth
Figure 2. Exponential growth

The graph shows what

exponential growth looks
like over time. Population
size increases by a larger
amount with each passing
year. The result is a "J"
shaped curve with a
rapidly increasing
population growth rate.

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 Population Growth
Figure 3. Logistic growth

The graph shows what

logistic growth looks like
over time. Population growth
initially increases, then levels
out after a certain point in
time. The result is an "S"
shaped curve and a slower
population growth rate.

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 Population Growth
Population growth will have many economic effects — both
positive and negative.

Let's first take a look at population growth's positive

economic effects.

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 Population Growth
Greater population growth can result in economic growth. More people in a
country means that there is more access to labor; more access to labor results
in more goods being produced and demanded — resulting in economic
growth! More people in a country will also result in higher tax revenues for
the government. The government can use the increased tax revenue on
building infrastructure or improving welfare programs. Lastly, a higher
population increases the probability of innovation in the free market.
Population growth's positive economic effects are clear — more people can
yield more output, tax revenue, and innovation in the market.

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 Population Growth
Let's now take a look at population growth's negative economic effects.

Greater population growth may exacerbate the problem of resource scarcity.

People will not be able to access resources since there will be too many
people demanding too few resources. Population growth can also put
pressure on certain areas where people migrate to, such as cities. Cities tend
to have more people living in them as opposed to rural areas; as such, cities
can become overburdened with too many people living in them. Traffic
congestion and pollution are often problems in these areas.

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 Wages
In economics, the price paid to labor for its contribution to the
process of production is called wages.

“A wage may be defined as the sum of money paid under contract by an

employer to worker for services rendered.” -Benham

“Wages is the payment to labor for its assistance to production.” -A.H. Hansen

‘Wage rate is the price paid for the use of labor.” -Mc Connell

“A wage is price, it is the price paid by the employer to the worker on account
of labor performed.” -J.R. Turner

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Wages
• The following are the two main concepts of wages:
• A. Nominal Wage:
• B. Real Wage:

A. Money Wages or Nominal Wages:

The total amount of money received by the laborer in the
process of production is called the money wages or
nominal wages.

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 Wages
B. Real Wages:
Real wages refers to the purchasing power of a worker’s wage or
salary after adjusting for inflation. It represents the actual
amount of goods and services that a worker can afford to buy with
their earnings.

The Consumer Price Index (CPI) is used to adjust inflation. CPI is

important because it can help determine the inflation rate used in
calculating real wages

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Wages
To calculate inflation, the following formula is the guide:
Inflation Rate=B−A/A, where:

B = current price of product/good or CPI for this product/good

A = starting price of product/ good or CPI for this product or
good
To calculate real wage, knowing the nominal wage and the inflation
rate, the following formula is used:
Real Wage=Nominal Wage−(Nominal WagexInflation Rate)

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 Wages
Different types of wages:
1. Piece Wages:
Piece wages are the wages paid according to the work done by the worker. To calculate the piece
wages, the number of units produced by the worker are taken into consideration.
2. Time Wages:
If the laborer is paid for his services according to time, it is called as time wages. For example, if the
labor is paid 350 pesos per day, it will be termed as time wage.
3. Cash Wages:
Cash wages refer to the wages paid to the labor in terms of money. The salary paid to a worker is an
instance of cash wages.
4. Wages in Kind:
When the laborer is paid in terms of goods rather than cash, is called the wage in kind. These types of
wages are popular in rural areas.
5. Contract Wages:
Under this type, the wages are fixed in the beginning for complete work. For instance, if a contractor is
told that he will be paid 100,000 pesos for the construction of building, it will be termed as contract
wages.
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Minimum Wage and
Employment:
The Overall Effects
Minimum wage and Employment
Minimum wages have been defined as “the minimum amount of remuneration that
an employer is required to pay wage earners for the work performed during a given
period, which cannot be reduced by collective agreement or an individual contract”.

The purpose of minimum wages is to protect workers against unduly low pay. They
help ensure a just and equitable share of the fruits of progress to all, and a minimum
living wage to all who are employed and in need of such protection. Minimum
wages can also be one element of a policy to overcome poverty and reduce
inequality, including those between men and women, by promoting the right to equal
remuneration for work of equal value.

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 Figure 1. The distribution of wages (hypothetical wage
distribution of a population of 56 wage-earners)

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 Figure 2. Main dimensions of effective minimum wages

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The Overall Effects

The effects of minimum wages on youth employment and

income minimum wages reduce employment opportunities
for youths and create unemployment. Workers miss out on
on-the-job training opportunities that would have been paid
for by reduced wages upfront but would have resulted in
higher wages later.

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Underemployment,
Labor Force
Participation
 Underemployment
Underemployment is a measure of the total number of
people in an economy who are unwillingly working in
low-skill and low-paying jobs or only part-time because
they cannot get full-time jobs that use their skills.

There are two types of

underemployment:
• Visible Underemployment
• Invisible Underemployment
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 Underemployment
• Visible underemployment is underemployment in which an
individual works fewer hours than is necessary for a full-time
job in their chosen field. Due to the reduced hours, they may
work two or more part-time jobs in order to make ends meet.

• Invisible underemployment. It refers to the employment

situation in which an individual is unable to find a job in their
chosen field. Consequently, they work in a job that is not
commensurate with their skill set and, in most cases, pays
much below their customary wage.

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 Causes of Underemployment

Underemployment can be caused due to several factors. The

period during and after a recession, when companies
downsize and lay off qualified workers, is characterized by
underemployment. Underemployment jumped to its highest
levels in the recession resulting from the global outbreak
crisis.

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 Labor Force Participation

The labor force participation rate represents the number of

people in the labor force as a percentage of the civilian
noninstitutional population. In other words, the participation
rate is the percentage of the population that is either working
or actively looking for work.

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Filipino
Migrations and
OFWs
 Filipino Migrations and OFWs
The Philippines is one of the foremost origin countries
for migrants around the world with an estimated 5.4
million emigrants in 2019, including approximately 2.3
million migrant workers, who are more commonly
known as Overseas Filipino Workers (OFWs).
Migration has become a common demographic response of
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Filipinos to various socio-economic problems. In the light
of the severe economic crisis that has confronted the
country in recent years, the Philippines has become a major
source for international migrants and become one of the
largest sending countries of labor to various countries in
the world. The Filipino workers, both women and men,
leave the country in order to earn a sustainable income, a
condition that is difficult or inadequate in their own
country

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OFWs
Remittances
 OFWs Remittances
Overseas Filipino workers (OFWs) based in the
United States were the leading source of remittances
received in the Philippines in 2022. Remittances from
the U.S. amounted to around 13.4 billion U.S. dollars
this year. Singapore followed this with remittances
amounting to 2.29 billion U.S. dollars.

Philippine migrant workers, commonly called Overseas

Click icon to add picture
Filipino Workers (OFWs), perform a vital role in the
economy. The stock of OFWs has averaged 4.8 million
over the last five years, with about 95 percent classified
as land-based workers. OFW remittances have emerged
as a major source of the country’s foreign exchange
inflows. Remittance flows contribute significantly to
economic growth with its share in gross national
product (GNP) averaging 8.9 percent over the last five
years.

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The Philippine Peso
and Foreign
Currencies
The Philippine Peso and Foreign
Currencies
The Philippine peso is the official currency of the
Philippines .It is subdivided into 100 centavos
(Filipino : sentimo). The peso is usually denoted
by the symbol "₱". The Philippine coins and
banknotes are minted and printed at the Security
Plant Complex of the Bangko Sentral ng Pilipinas
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(Central Bank of the Philippines) in Quezon City

The Philippine peso has the currency abbreviation

PHP and goes by the symbol ₱. The value of the
Philippine peso has ranged from below 48 pesos to
one U.S. dollar to 53.89 pesos to one dollar.
Philippine pesos currently circulate in banknotes of
20, 50, 100, 200, 500, and 1,000

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Effects of Peso
Depreciation against
US Dollars
 Effects of Peso Depreciation against
US Dollars
When the peso depreciates in value with respect to
another currency like the US dollar, it takes more
pesos to exchange against the dollar. The meaning
of this in real economic activity is that foreign
goods and services that we import become more
expensive to Filipinos.
Click icon to add picture

Example The cost of foreign goods and services

increases. For instance, if one is traveling to other
countries, the cost of travel (in local peso terms)
becomes more expensive: airline tickets ,
accommodations, meals, all purchases abroad.
Hence, a peso depreciation has the effect of
discouraging the purchase of imports.

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The Philippine
Housing Shortage and
the Real Estate Boom:
Rent and Prices
The Philippine Housing Shortage and
the Real Estate Boom: Rent and Prices

HOUSING SHORTAGE – a deficiency or lack in the number of houses needed to

accommodate the population of an area present when there is insufficient housing to
accommodate the population in an area the supply cannot meet the demand.

Housing problems in the Philippines are a serious issue that can stall the rapid development
and growth of the country. The economy and infrastructure of the country may be
improving, but experts say the lower segments of the socioeconomic classes don’t feel
this.
The housing backlog in the Philippines is a whopping 3.9 million households, which
means there are 3.9 million families without a home to call their own. If the production of
housing units would average 200,000 every year from 2012 to 2030, the backlog would
persist. Around 6.5 million families will still be homeless by 2030.
The Philippine Housing Shortage
and the Real Estate Boom: Rent and
Prices
WHY DOES HOUSING SHORTAGE OCCUR?
1. RAPID POPULATION GROWTH – LEADS TO RAPID
INCREASE IN DEMAND FOR HOUSING (DEMAND > SUPPLY =
HOUSING SHORTAGE)
2. MIGRATION – MOVEMENT OF PEOPLE FROM ONE PLACE
TO ANOTHER STAY FOR AT LEAST A YEAR
3. HIGH BIRTH RATES – LEADS TO THE INCREASE IN THE
POPULATION. (HOUSING SHORTAGE WHEN THE SUPPLY OF
HOUSES CANNOT MEET THE
INCREASED HOUSING DEMAND)
4. COMPETING LAND USE – LAND IS USED FOR MANY
PURPOSES
The Philippine Housing Shortage
and the Real Estate Boom: Rent and
Prices
REAL ESTATE – is a property compromised by land and the buildings
on it. Also, the business of real estate is the profession of buying, selling
or renting land, building or housing

The Philippine real estate market is one of the most exciting and fastest-
growing markets in Southeast Asia. In the past decade, the country has
experienced a boom in its economy, and property prices have soared.
Despite the recent global economic slowdown, the Philippine real estate
market has remained buoyant. This suggests that the Philippine real estate
market is resilient and well-positioned to continue to capitalize on the
growing demand for housing and investment opportunities.
Affordable
Housing
 Affordable Housing
Affordable housing is housing which is deemed affordable to those with a
household income at or below the median as rated by the national government or a
local government by a recognized housing affordability index. Most of the
literature on affordable housing refers to mortgages and a number of forms that
exist along a continuum – from emergency homeless shelters, to transitional
housing, to non-market rental (also known as social or subsidized housing), to
formal and informal rental, indigenous housing, and ending with affordable home
ownership.

Housing choice is a response to a complex set of economic, social, and

psychological impulses. For example, some households may choose to spend
more on housing because they feel they can afford to, while others may not have a
choice.

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thank you